SMALL CAPS FOCUS: Investors brace for increased trading as AIM stocks become exempt from stamp duty next week

Investors hoping for increased trading volumes in the out-of-favour junior market could be in for a treat next week.

From April 28, the Alternative Investment Market will become exempt from stamp duty and investors will no longer have to pay the 0.5 per cent fee when they buy AIM stocks.

It is all part of the government’s drive to attract institutional and retail investors to the growth market, which will make it cheaper and easier for companies to tap the market for cash.

AIM: From Monday shares in the Alternative Investment Market (AIM) become exempt from stamp duty, meaning investors no longer have to pay the 0.5 per cent fee when they buy AIM stocks

Traders are expecting the stamp duty abolition to have a similar effect as the inclusion of junior shares in ISAs had on AIM in August.

It will be a timely boost for the market, which has suffered lower volumes since that injection of life into the market.

Having said that, £1.15billion was raised in March, the largest amount since December 2010, thanks mostly to some big name IPOs, such as online fashion retailer boohoo.com, which raised £300million, and Ireland’s biggest hotel operator Dalata Hotel Group, which raised £221million.

Other new listings included Venture Life Group, behind healthcare products for ageing customers, and New Zealand oil explorer Mosman Oil & Gas. The latter’s shares enjoyed a 25 per cent rise this week.

More than double the monthly average over the past two years was raised in March through secondary fundraisings by companies already on the market.

The figures from Allenby Capital however show that this is still some way off the highs seen before the financial crash in 2008.

The FTSE AIM 100 fell 50-odd points over the shortened trading week to 3,647. The biggest AIM shares have now fallen 6 per cent so far this year, which is a much heavier fall than the 1 per cent experienced by the blue chip FTSE 100.

That decline was exacerbated by small-cap heavyweight Quindell, which slumped after a note from Gotham City Research.

It prompted the insurance outsourcing group into a quick response in which it slammed the accusations.

It has now launched legal action against those responsible for shorting the stock.

Sound Oil jumped 1.4p to 7.2p after a £14 million cash injection from Italy’s Continental Investment Partners, which has taken a 23 per cent stake in the AIM-listed gas field developer.

It agreed to subscribe for shares at an average price of 9p, post a warrant exercise - a near-70 per cent premium to Thursday’s closing share price.

The cash will be used to fund Sound’s drill programme for the next year, including the Nervesa and Badile discoveries.

Shale gas explorer IGas Energy fired up 11p to 134p following a report that the nascent industry in Britain is a £33billion opportunity.